Irda says no to 100% FDI in insurance broking biz

The Insurance Regulatory and Development Authority of India (IRDA) has ruled out allowing 100 per cent foreign direct investment (FDI) in the insurance broking business. “There is no plan to allow 100 per cent FDI in insurance broking,” said a top official. In 2013, Irda had appointed a committee under its senior director Suresh Mathur, Sr joint director, Irda, to look into the possibility of 100 per cent FDI in broking business as the Insurance Act did not specially mention about limiting FDI to 26 per cent in broking. As the Parliament has allowed 49 per cent FDI in insurance, and subsequently FIPB has said insurance broking industry will abide by the 49 per cent FDI, the insurance regulator has said FDI in broking will now continue to be restricted to 49 per cent. With foreign players pressing for 100 per cent FDI in broking business, an intense tussle was on between foreign and Indian insurance brokers on the issue of higher FDI. Even with 49 per cent FDI limit, there are many instances where (holding 51 per cent collectively but in a fragmented  form) the foreign partner is the ‘largest shareholder’ for all practical purposes. With 100 per cent FDI, the foreign broker will become the “sole shareholder”, local brokers had complained to Irda. An official of the Insurance Brokers Association said, “Irda has clarified that there is no move to raise the FDI further from 49 per cent to 100 per cent. We had sought clarification from IRDA and the insurance regulator has made its stand clear.” The broker association had argued that the broking industry falls under the SME category and 100 per cent FDI will harm the domestic industry. In view of the less capital requirements for the reinsurance broking companies, the margin of the profit that the foreign reinsurance broking companies would earn will be an outflow from Indian financial system, local firms said. After the Parliament passed the 49 per cent FDI stake, foreign insurance brokers started lobbying to raise this stake to 100 per cent but Irda seems to have turned it down as the rules governing broking business may now require another amendment by Parliament. Foreign players have been arguing that higher FDI is required to bring in required expertise, connectivity and experience. There are around 400 members who handle 20 per cent of the Rs 84,000 crore premium generated by the Indian general insurance industry.

How to stop wasting $40bn on Leadership and Talent

Most leadership development initiatives fail to deliver any measurable results despite huge investments

Leadership development is failing leaders. In a global HR survey BCG runs every two years, leader ship development has always been rated as the most important, but poorly addressed, need by CEOs and HR heads.It represents one of the biggest spends on people outside of salaries ­ estimated at a staggering $40bn a year. However it is failing to deliver any measurable results. CEOs and leaders are no more successful today than they were earlier.In fact on many counts, they are failing faster and more spectacularly.

One of the key reasons for the failure of leadership development is the lack of good, robust data that allows companies to know whether their efforts in leadership and talent management are delivering results and are well directed. Companies develop leadership programs and interventions without the data to guide them about what really leads to results. This is like driving blind in a storm at really high speeds. No wonder the $40 bn spend is wasted! To address this gap, BCG created the BCG Global Leadership and Talent Index (GLTI), which is a study of more than 1,200 global executives. It is a simple 20-question survey that precisely places a company in one of six leadership and talent management capability levels and suggests ways to systematically move from one level to the next. With this, the money and efforts can be welldirected to have a real impact. So how can companies get better at leadership development?

Leadership and talent interventions to drive business performance:

Intuitively, we have always felt that leadership and talent management capabilities have a strong correlation with financial performance. This impact had never been quantified. The GLTI shows that the `talent magnets’, or companies that rated themselves strongest on leadership and talent management capabilities, increased their revenues 2.2 times faster and their profits 1.5 times faster than the `talent laggards’, or companies that rated themselves the weakest.

It turns out that ten capabilities correlate strongly with business performance.(See graphic) Companies that are strong on these capabilities typically deliver strong business performance. In particular, translating leadership and talent plans into clear and measurable initiatives, leaders devoting significant time to leadership and talent management, and making leaders accountable for talent development are the three capabilities with the greatest payoff. Notably, four of the ten capabilities require the active participation of leaders. The companies that excel at leadership and talent management have figured out how to involve their leaders meaningfully and regularly in people development. In fact, leaders at high-performing companies can spend more than 25 days a year on leadership and talent management activities.

Making the transition:

Companies must benchmark themselves and clearly chart out a course to progress towards becoming talent magnets. Companies that do badly at talent development initiatives need to fix the basics.An overall leadership and talent development culture is generally absent in these companies and they need to act on three key fronts. Firstly, they need to put in place a leadership model that clearly articulates the competencies that their leaders need to demonstrate. Secondly, their senior leaders must be made to spend their time on developing and grooming talent. Finally, they must put in place core leadership and talent management systems.

Then there are companies which have a leadership model in place. However, it is not yet an integral part of their people processes. They need to embed leadership competencies into recruiting, performance management and rewards systems. They also need to put in place structured training and development programmes to develop the desired competencies and continually build and establish a culture of people and leadership development.

Companies which sit in the middle generally have core leadership and talent processes and planning in place.To move ahead, they need to align their leadership and talent plan with business strategy and actively measure and track progress. They need to pay attention to sourcing talent externally by tailoring their employer brand for specific talent pools and identifying and grooming internal talent for future leadership roles. Culture is important at every step but especially at this level. Unless senior leaders demonstrate substantial commitment and support to these initiatives, the company is unlikely to become a high performer.

Companies at the top of the scale need to continuously adapt themselves to changing leadership and talent needs.The companies with the strongest leaders and talent have an ongoing commitment to initiatives such as corporate universities and leadership academies, and long-range strategic processes.Leadership and talent systems are not only fully embedded in the organisation but also capable of evolving to the changing needs to the business. They regularly conduct strategic workforce planning, succession planning, and talent-diversity exercises. In these companies, leadership and talent management issues are on the senior executive agenda–leaders prioritise and spend time on these issues more than in other companies. CD The author is a Senior Partner & Director in the Mumbai office of The Boston Consulting Group.

An Ode to Joy

In an age when entertainment is the third-biggest industry in the world, one would think that joy would be fashionable.If only it were. Take a look around and you will see the opposite. Everyone seems to want to express a sort of depressed solemnity . It’s not hard to see why . Joy comes unmediated. It is spontaneous.But our society is too sophisticated for its own good, our culture too managed and fabricated. Spontaneity is mistrusted. You get an idea of spontaneous joy watching a small child at play . But I suspect we are all capable of it long after we have reached the age of self-consciousness.

Our working hours increase as the stress of our working lives becomes more intense.We make sure we are always on call. If we think about it, we reckon that all this is probably necessary because we can have our larger liberty only if we remain competitive, if we work harder than the next guy who’s trying to work harder than us. We compensate by buying distractions. We buy `enjoyment’, a tepid version of spontaneous joy , indulge in consumer therapy . We impose on our children our own frenetic regimes. School is not for enjoying, it is for remorseless testing, a permanent preparation for exams rather than a preparation for life with plenty of space for joy . And then we wonder why teachers complain that there is no `joy’ left in teaching. Occasionally , we need to defy the empire of necessity ­ if only to prove that we can. It might even help put a smile back on our faces.

Source: Economic Times

Date: 23rd July 2015

REGULATOR PROPOSES NEW RULES – Irda Wields Axe on Commissions to Distributors

Norms aimed at cutting expenses of insurers to raise returns for policyholders

The insurance regulator is looking to crack down on commissions that take a big bite out of initial premiums, mostly without the customer’s knowledge. Such commissions can at times be as much as 25-30% of the first payments on policies.

Under the proposed new rules, the Insurance Regulatory & Development Authority (Irda) has sought to restrict the expenses that an insurance company can charge on premiums, correcting a decadesold practice of big commissions paid to distributors that have been weighing down returns for policyholders. These mostly go under the radar and are only discovered, for instance, at the time of early surrender of a policy, experts said.

The regulator has also proposed the scrapping of upfront commissions that some insurance companies pay distributors such as banks, which could put a question mark on such tieups. ET has reviewed a note by the regulator announcing the new rules that are yet to be notified. The move by the regulator will help reduce mis-selling of policies.

“This will bring in transparency and discourage forced selling of insurance products,“ said SB Mathur, former chairman of the state-owned Life Insurance Corp. of India (LIC).

Irda has proposed a policy for the allocation of expenses for various segments. It said that no insurer should spend more than an aggregate 10% of all firstyear premiums and 4% of all renewal premiums on policies granting deferred annuities for more than one premium; 5% of premiums received during the year on single-premium annuity products and 120th of 1% of the average of the total sums assured by policies excluding sin gle-premium policies.

The proposed rule changes may lead to some immediate pain but will have a beneficial effect in the long term, said an executive.

“In the short term, it will put pressure on insurance companies to cut costs by innovation, digitisation, reducing customer acquisition costs and reducing turnaround time,“ said a compliance officer at a large life insurance company. “If the overall expense of companies comes down, it will benefit both policyholders and shareholders.“

The insurance regulator has sought to ban advance payments to intermediaries or distributors as part of the new expense management norms.

“No upfront payments whether direct or indirect is allowed in respect of current and future business volumes to insurance intermediaries,“ Irda said. “No payment to insurance intermedi aries can be made in advance before the risk start date of any policy­whether retail or corporate.“

Such upfront commissions are generally part of corporate agency partnerships, where insurance companies get into a long-term tieup with banks. Insurers find selling products through bank branches attractive as it’s a low-cost model and provides access to an existing customer base.

According to media reports, AIA paid Citibank $800 million as part of an Asia deal to distribute products of the Hong Kong-based insurer in 11 markets including India in 2013. Prudential is said to have paid $1.2 billion in fees in installments over three years to Standard Chartered Bank for a 15-year tieup. In India, Citibank sells products of Tata AIA Life Insurance while Standard Chartered sells ICICI Prudential Life Insurance products.

Source: Economic Times

Date: 23rd July 2015

Price is Important! Well, Not So Much!

What steps do you take to assure your client has the best insurance carrier? The “best” carrier is the one that best combines coverage (protection), service, and price.

Coverage (Protection)

Why do your clients buy insurance? Most say, “Because they have to.” Only a few professionals say that insurance is purchased for peace of mind.

Regardless the real or perceived reason, your client wants to be covered when a loss occurs. If you sold a policy without including coverages that are readily available for a reasonable price, guess what – you did your client a great disservice. In fact, if the proper coverage wasn’t presented – you could ruin your client’s life and/or business.

Coverage is the most important aspect of insurance. Clients want to be covered at the time of loss; and here is an errors and omissions (E&O) truism: “No coverage is ever too expensive – AFTER the loss.”

Consider the protection provided – first!

Service 

A close second to coverage – almost a “dead heat” in reality – is service. How well does the insurance carrier take care of your client after a loss? How smooth is the premium audit process? Is the carrier’s customer service department willing to help the client (and the agent) when any other problems arise (i.e. billing, policy changes, etc.)?

If the carrier’s claims handling and customer service is rotten, your client will still be “ticked off” regardless of how good the coverage is or how low the price is. And guess who they hold responsible – the agent.

You know which of your carriers offer great service and which carriers don’t. Take care of your client by coupling the best coverage with outstanding service.

Price

No one is going to deny that price is important; but price is NOT the most important consideration when picking a carrier. The sad fact is that Progressive, The General, GEICO, and a hundred other carriers have convinced the public (and some in the insurance industry) that price is the most important consideration.

Insurance “COSTS” more than just the premium. The cost of insurance includes deductibles, losses that could/should be covered but aren’t, and aggravation expense (opportunity costs).

Never let price be the primary factor when placing an insured with a particular carrier.

Source: Insurance Journal

JLT SPECIALTY INSURANCE SERVICES INC. ANNOUNCES APPOINTMENT OF JOE ADDISON AS EXECUTIVE VICE PRESIDENT

JLT Specialty Insurance Services Inc. (JLT Specialty USA), a U.S. subsidiary of Jardine Lloyd Thompson Group plc. (JLT), one of the world’s leading specialty-focused providers of insurance, reinsurance and employee benefits related advice, brokerage and associated services, is pleased to announce the appointment of Joe Addison as Executive Vice President and member of the U.S. Executive Committee.

Addison will be based in Atlanta where he will oversee the U.S. Entertainment and Hospitality practice and will also be responsible for leading the development and growth of JLT Specialty USA in the southern United States.

“We are privileged and delighted to welcome Joe to the JLT Specialty USA family” said Michael Rice, Chief Executive Officer of JLT Specialty USA. “We are energized by the launch of our U.S. Entertainment and Hospitality practice under Joe’s leadership.”

“It’s an honor to have such a tremendous talent join the JLT Specialty USA family,” added Jim Pierce, Chairman of JLT Specialty USA. “We look forward to Joe providing our clients with new approaches and solutions to the most complex risks and challenges.”

Addison comes to JLT Specialty USA from Aon where he served as CEO of the Entertainment Practice, a global business serving many of the leading Entertainment, Sports, Media and Hospitality companies. He became CEO of the practice in 2007 after overseeing the merger between Aon/Albert G. Ruben’s Sports and Recreation Specialty practice—a division that Addison started—and the Entertainment Group. Addison brings to JLT 25 years of experience and holds a B.B.A. degree from the University of South Carolina and is a graduate of the world renowned INSEAD program for managers.

JLT Specialty USA provides core capabilities in the key industry specialty areas of Aerospace, Construction, Energy, Entertainment and Hospitality, Private Equity, Real Estate, and Technology and key product specialty areas of D&O, Cyber, E&O, Credit, Political and Security Risks, Environmental and Transactional Liability.

TALENT DIARIES – Moving on to the competition? Think twice!

If you are being poached but stand to gain in this competitive market, would you complain?

“COMPETITION IN THE PRODUCT MARKET IS GOOD FOR THE MARKET, AND THE SAME SHOULD BE TRUE IN THE LABOUR MARKET,“ SAID TIM GARDNER, CO-AUTHOR OF “THE ETHICS OF LATERAL HIRING“

LATERAL HIRING“ .While Gardner concludes that poaching is not immoral, there are disadvantages to hiring from the competition; especially the loss of goodwill with existing talent in the company, since poaching almost always involves different and potentially better benefits and pay. And when it is done with the main purpose to obtain trade secrets from another company, the act of poaching becomes unethical.

TOP THREE REASONS EMPLOYERS HIRE FROM COMPETITION

Trained talent: The talent is considered fast and high performance; hitting the ground running.Customers: It is specifically alluring for sales driven companies as it is a common belief (or misconception) that these talent bring with them an exhaustive customer list with doors easily opened! Institutional knowledge: The talent also brings the know-how of advanced technology and processes which the hiring company can benefit from.

A FEW THINGS WHICH NEED TO BE ASCERTAINED BY TALENT WHO ARE JOINING THE COMPETITION:

Have you signed a legally binding anticompetitive contract with your existing employer? In some cases, these can be proven as a violation by your employer; Are they hiring you for your competency and potential or just for some competitive information you have, including customer relationships and product knowledge?
Are you joining competition only for the high increment they are offering or are there more substantial reasons such as a bigger role; better professional growth; inspiring leadership; and cultural fit that are all crucial for long-term success? Have previous candidates had a good experience with your new employer? In addition, you would also need to win the “battle of the mind“ as leaving your current employer to join the competition can be an emotionally draining exercise.

A FEW TIPS TO HELP YOU GET MENTALLY PREPARED FOR WHAT LIES AHEAD:

Don’t be taken aback by dramatic reactions from your colleagues and boss; Refrain from sounding critical or personal on reasons for leaving. It’s a small world so you never know how soon you might have to eat your own words; You might be asked to leave on the very same day, hence, please pack in advance; Condition your mind to feel comfortable to compete against your colleagues of whom a few, if not all, are now friends.

THE KEY IMPACT FOR ALL INVOLVED PARTIES WHEN A TALENT JOINS THE COMPETITION IS SPEED:

COMPETITION IS SPEED:

The competition gets the speed to customer and market due to securing a talent who has been well trained; The talent acquires a higher role, better title and more money with at a speed he can never come to expect with the current employer.

The employer who loses the talent loses his speed as he has to train a new talent to sustain his competitive advantage.

However, if hiring from the competition is the only HR strategy you have in place, you are planning to fail, indefinitely. As for the talent, if you are being poached and are gaining in this competitive market, you wouldn’t be complaining, would you?
The author is MD ­ India, Kelly Services & KellyOCG

Source: Times of  India

Date: 22/07/2015